Where Shopping Is Going Strong: Online
The latest consumer spending numbers for September may not have been as rosy as analysts expected, but consumers have been less shy about spending more in cyberspace. Online retail spending rose an impressive 9% year-over-year in the third quarter, according to a report from Internet marketing and research firm comScore (SCOR) today. Such positive growth going into the fourth quarter could bode well for the upcoming holiday shopping season in spite of signs that indicate consumer spending at this level may be unsustainable.
Earlier on Nov. 1, the Commerce Department said consumer spending rose at an annual rate of 0.2% in September, lower than the 0.5% recorded in July and August. For the third quarter, consumer spending rose 2.6%, the fastest rate since 2006. Of course, when consumers are barely spending at all, any decent activity can look like a major spike.
"We Continue to Preach Caution"
Online retail spending reached $32.1 billion for the quarter, representing the fourth straight quarter of positive growth. Such momentum is giving online retailers hope that things could be poised to turn the corner. For 2010, online spending increases have been steady, growing 10% year-over-year in the first quarter and 9% year-over-year in the second quarter.
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"Retail e-commerce growth in the third quarter remained solid at 9%, a fairly positive indicator for the upcoming holiday season," said comScore Chairman Gian Fulgoni in a statement. "However, we continue to preach caution due to the continuation of high unemployment, which is creating very divergent spending patterns between the 'haves' and the 'have nots.'"
The comScore report said the top 25 online retailers accounted for 70% of all dollars spent online. Books and magazines (excluding digital downloads), computers/peripherals/PDAs, computer software (excluding PC games) and consumer electronics were the top-selling categories.
Even with the strong third-quarter growth, Fulgoni noted that a positive holiday selling season isn't a given. "Until the economy begins adding jobs at a meaningful rate," he said, "the lack of spending power among consumers will continue to be a drag on purchasing, with many consumers indicating their intention to cut back on gift-buying this holiday season."
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